Read Brad DeLong (the best econ post this week; for better or worse, no one gets impeached).  My view is simple: I don’t much trust any very specific macro model.  So I look at current market prices and I ask two questions.  First, does the country in question have relatively sound fundamentals, relative to other parts of the world?  Despite the erosion in the quality of governance in the U.S., I still answer yes.  Second, I try to develop a crude but intuitive "theory" of what the market hasn’t taken into account.  I don’t have a strong guess here but the Setser-Krugman pessimistic view seems well enough known that it doesn’t fit this bill.  That gives me a second reason not to be a pessimist.

More specifically, I am not what Brad calls an "international finance economist":

International finance economists, by contrast, look at the asset markets. A 40% decline in the dollar over four years is a decline at the rate of 10% per year. Once financial markets convince themselves that such a decline is coming and that they need to be compensated for it, that ought to drive a 400 basis point wedge between U.S. and foreign long-bond expected returns.

I would be surprised if a dollar decline led to such consistently high interest rates in anticipation.  Uncovered interest parity is an unreliable relationship and often the relevant variables behave more like random walks, whether or not they should according to theory.  Also read this Economist article on why interest rates may not skyrocket if the dollar dives; links to specific papers are at the bottom of the article.

Addendum: I don’t think I have had any influence on his specific subsequent views, but I am proud to have had Stephen Jen as an undergraduate in the first class I ever taught at UC Irvine.

These get harder to do each time (without descending into the gross, that is), but semagoediv [that’s "videogames" backwards] makes my life easy:

[Brock Enright] has had some 40 clients to date, and what they ask for can vary enormously. One woman he is currently working with in New York, in a game lasting several months, is trying to conquer her fear of deceit, and so, as if to inoculate her, Enright has inveigled around 25 new characters into her life, using actors. He has about 25 barmen on his books. “I’m not a therapist; I’m more like a cartoonist,” he says.

Of his kidnap subjects, some enjoy a three-day “game”, in which Enright and his team follow their movements and (subject to request, safety and various legal agreements) abduct them for around six hours before dumping them. I opted for the budget “Fantasy Photo” option, in which it was understood that the artist would stage a kidnapping and take a series of souvenir pictures. It was no picnic.

After our tea, Enright sent me off down a side street to wait. The precise form my adventure would take wasn’t clear until a Jeep careered around a corner, and figures in balaclavas jumped out and forced me into the back. I was hooded and held down. We drove a short distance and I was manhandled into what I later realised was an artist’s studio, and slammed down into the corner.

I won’t report the accompanying sexual humiliations, and yes the "weakies" are (supposedly) weeded out in advance by "psychological tests."  Legal waivers are signed as well.  Get this:

Kidnapping isn’t all he does, he emphasises, but his other projects seemed similarly unpleasant. They include one in which he simulates mass murders on a basketball court chalked up like a Ouija board, and another in which he acts as an internet counsellor encouraging suicide…

Here is the main story.  Here is a story of how the torture of your kidnapping is custom-designed to match your fears.  Enright has many repeat customers.